Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

My question is to the leader of government business, representing the Prime Minister. Minister, last week the OECD published analysis of national accounts showing that in 2022 in Australia more than half of domestic inflation came from profits, and inflationary pressure from profits was more than twice as much as that from wages. The OECD's method and findings are consistent with those of The Australia Institute. Minister, does the government think the OECD's analysis is flawed or will the government now finally accept that profits are the primary domestic driver of inflation in Australia?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

Thank you, Senator McKim, for the question. Whilst I may not agree with the way the question is framed, at least we have a focus on one of the issues that Australians are so concerned about and the government is so concerned about, which is inflation and what is the best way to try and deal with the challenge—which is a global challenge as well as a national and domestic challenge.

In much of the last budget, as the Treasurer and the finance minister spoke of in the lead-up to the budget, budget measures were focused on how it is that the government can, through its policies, neither fuel inflation nor simply go down a road which tells Australians they're on their own—which appears to be the path the opposition wishes to take. We are not of that view. We have put in place a range of budget measures, some of which those opposite voted against, to ensure there is cost-of-living relief for Australian families. I note that those opposite voted against the Energy Price Relief Plan, which will take three-quarters of a percentage point off inflation according to both Treasury and the RBA governor. The governor has made clear, at Senate estimates, his view about the relationship between the budget and inflation, and the importance of reducing inflation.

I would also say to you, Senator McKim: what is helpful in this debate is to recognise there are a range of factors which contribute to inflation, and the role the government has to take is to steer a course through some pretty difficult economic challenges and to ensure we provide cost-of-living relief to Australian families without adding to inflation.

Sue Lines (President) Share this | Link to this | Hansard source

Senator McKim, first supplementary?

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Minister, there are indeed a range of factors driving inflation. But, last week, the European Central Bank echoed many others by saying that corporations with market power are using supply shocks as cover to increase their margins. What is the government doing to stop corporate profiteering? Why won't the government introduce a corporate super profits tax or monopoly busting divestiture powers?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

First, the economic proposition that well-functioning markets will ensure you get efficient prices is the correct one. The senator is right that it would be inappropriate for any corporation or any firm to utilise current supply constraints to profiteer. That would be inconsistent, I think, with the expectations of the Australian people, and would also be an economically unreasonable thing to do in terms of the broader economy.

I'll make the point, though, that the policy proposition that the Greens go to, to respond to that, is obviously not the policy proposition that the Labor government would go to. What we would say is that we welcome good profit growth when it is accompanied by strong investment, competitive with markets and a fair return for workers. We would hope that Australia's existing regulation— (Time expired)

Sue Lines (President) Share this | Link to this | Hansard source

Senator McKim, a second supplementary?

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Minister, last week the RBA raised interest rates for the twelfth time in just over one year. Why won't the Treasurer act to freeze rents and use the existing powers in the RBA Act to step in and stop the RBA raising rates? How is the RBA smashing mortgage holders and renters for a problem that they didn't cause fair or good for the country?

Penny Wong (SA, Australian Labor Party, Minister for Foreign Affairs) Share this | Link to this | Hansard source

I'll make a few points. The first is we know and we understand how tough these interest rate increases are for Australian families. I'll be very clear about that. Those on this side of the chamber and the government have made the cost of living a priority in the budget and the measures in which we are investing and applying taxpayer funds, to try and work with and assist Australian families who are struggling with cost-of-living increases.

Again, I'll make the point that those opposite voted against the energy relief plan, which was obviously a key factor in terms inflation and price increases.

In terms of the broader question, obviously monetary policy is run independently. That is the position the government takes; it's the position governments of both persuasions have taken. (Time expired)